JAN. 22 2015 (The Conway Bulletin) — Armenia’s Central Bank increased its refinancing rate, the cost it charges other financial institutions to borrow money, by 1% to 9.5% to slow inflation. In December, the Central Bank increased the refinancing rate to 8.5% from 6.5%. New data showed prices rose 4.6% in December.
ENDS
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(News report from Issue No. 216, published on Jan. 28 2015)
>>Tajik CBank can’t afford aggressive defence of somoni again>>
JAN. 20 2015 (The Conway Bulletin) — Russia’s rouble crisis is pushing Tajikistan to the brink of bankruptcy. The Tajik Central Bank has said that it spent half the country’s reserves last year trying to prop up its currency against the falling rouble.
These are worrying times for Central Asia’s governments. A combination of falling oil prices and Russia’s economic turmoil is pressuring their own finances.
Remittances from Russia have fallen sharply in value over the past six months or so, undermining economies in Tajikistan and Kyrgyzstan especially.
Central Banks have been spending heavily to try to bolster their currencies against a falling Russian rouble but this has proved difficult.
Despite spending half its national reserves — there is now less than $500m left in the Central Bank’s reserves — the value of the Tajik somoni has still fallen over 10% against the US dollar. Inflation has also risen.
All the signs are that 2015 will be complicated too. What the Tajik government can’t afford, though, is another costly battle to defend the somoni.
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(News report from Issue No. 215, published on Jan. 21 2015)
JAN. 7 2015 (The Conway Bulletin) — Uzbekistan’s Central Bank has cut its refinancing rate for domestic banks to 9% from 10%, media reported. The refinancing rate is the cost of borrowing between financial institutions. The Central Bank said it had cut the refinancing rate to try and boost investment.
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(News report from Issue No. 214, published on Jan. 14 2015)
>>Russian rate rise triggers Armenian reaction>>
DEC. 23 2014, (The Conway Bulletin) — Armenia’s Central Bank raised its key interest rate to 8.5% from 6.75%, a move widely interpreted as an attempt to keep up with its Russian counterpart.
Inflation in Armenia is creeping up, mainly because of anticipated price pressure triggered by joining the
Kremlin-led Eurasian Economic Union which ties the Armenian economy even more closely into the Russian economy.
In November Armenia’s annualised inflation was 2.6% up from 2.2% in October and economists have said that this trend is likely to accelerate.
But the Russian Central Bank’s defence of its rouble currency is also giving its allies a headache.
In mid-December to stop a run on the rouble, the Russian Central Bank raised interest rates overnight to 17% from 10.5%. This has forced its closest allies to follow.
Armenia is in a tight spot.
It is so reliant on Russia that it has become a virtual satellite state, and more so after it signed a deal to enter the Eurasian Economic Union.
Adapting to the Kremlin’s Eurasian Economic Union and the impact of this political-economic move will dominate Armenia in 2015.
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(News report from Issue No. 213, published on Jan. 7 2015)
>>Central Bank has already increased interest rates this year>>
DEC. 29 2014, (The Conway Bulletin) — Inflation in Tajikistan jumped to over 7% in 2014, the Central Bank said, around double the rate in 2013.
The final figures for the year are not yet out but the Central Bank said annualised inflation up to the end of November had been 6.8% and that this would creep up again when December’s data was analysed.
Tajikistan raised its interest rates in October to 6.9%, its highest level since 2012, up from 4.8% earlier in the year, to try and steady its economy against rising inflation.
With remittances from Russia, which contribute to around 50% of GDP, dropping because of a slowdown in the Russian economy, Tajikistan is facing up to an increasingly tough time.
News that inflation is rising just adds to the headache.
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(News report from Issue No. 213, published on Jan. 7 2015)
JUNE 24 2014 (The Conway Bulletin) – Armenia’s Central Bank cut its key interest rate by 0.25% for the third time this year because of continued falling inflation.
The new 7% interest rate is the lowest set by the Armenian Central Bank for four years, reflecting concern over an economy that is bouncing along the bottom of economists’ forecasts.
Like other parts of the former Soviet Union, the unrest in Ukraine and the sanctions on Russia have impacted Armenia and slowed its economic prospects.
The Central Bank was succinct.
“There was 0.8 percent of deflation in May of 2014,” it said.
“In the coming months, the Board considers, that the inflation rate will keep on easing as the impact of energy prices, increased in July 2013, phases out, and it will further pace down (to) the lower boundary of the confidence band most probably during the third quarter.”
In other words, Armenia’s Central Bank is gently warning that its economic indicators will worsen further before there is any sign of improvement.
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(News report from Issue No. 190, published on June 25 2014)
MAY 13 2014 (The Conway Bulletin) – Armenia’s Central Bank cut its key interest rate to 7.25% from 7.5% after data showed that inflation was within its target range, Reuters reported quoting the Central Bank. Annual inflation in April measured 4.4% within the 2.5% to 5.5% bracket.
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(News report from Issue No. 184, published on May 14 2014)
MAY 10 2014 (The Conway Bulletin) – Azerbaijan cuts its key interest rate to a three year low last month because of a drop in inflation, Elman Rustamov, head of the Central Bank, said.
The Azerbaijani economy is generally on the up. There are some weak points, such as loose controls over consumer borrowing, but the Central Bank is managing to maintain growth rates as well as keeping inflation under control.
So confident has the Central Bank been feeling that on April 30 it cut its key interest rate to 4.25% from 4.75%. This was the first rate cut for 14 months and marks the lowest level since 2011.
Mr Rustamov explained the thinking behind the rate cut.
“Inflation in the country is at its lowest level. By the outcome of the first quarter, the inflation in the country stands at 2%,” he said.
“Interest rates need to be reduced. They should be reduced to such a level that they will be suitable both for the population and for businesses.”
Of course slowing inflation can also mask other problems. There may have been a slowdown in consumer demand and the economy may need a nudge.
But relaxing interest rates also presents a risk to Azerbaijan’s economy. Recent reports from international economists have all highlighted the threat from consumer borrowing. Moody’s said that consumer loans would grow by 20% this year, compared to 25% last year.
Cutting interest rates is hardly going to curb this trend.
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(News report from Issue No. 184, published on May 14 2014)
JAN. 13 2014 (The Conway Bulletin) — Tajikistan cut its key interest rate to a record low of 4.8% to combat falling inflation, media reported quoting the Central Bank. It previously cut the key interest rate to 5.5% in October 2013. Falling inflation, marking slower economic growth, is a major concern for Central Banks in the South Caucasus and Central Asia.
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(News report from Issue No. 167, published on Jan. 15 2014)
JAN. 1 2014 (The Conway Bulletin) — Uzbekistan’s Central Bank cut its key interest rate to 10% from 12% to try and combat falling inflation, media reported. Uzbekistan’s interest rate had been 12% since January 2011. Analysts expect official inflation in Uzbekistan to fall in 2014 to around 6% from 7% in 2013.
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(News report from Issue No. 166, published on Jan. 8 2014)